The company, which largely has "buy," "market perform" and "accumulate" ratings from investment banks, saw its stock fall $2.19, or almost 7 percent, to $30.75 this morning after Sanford C. Bernstein analyst Faye Landes began coverage on the company with an "underperform."
Amazon is trading well off its 52-week high of $113, skirting closer to its low of $27.87 for the same period.
The unfavorable rating comes less than two weeks after Amazon's biggest booster, Merrill Lynch analyst Henry Blodget, lowered his short-term rating on the company to "accumulate" from "buy."
Blodget is one of several analysts who downgraded their ratings of Amazon after the company reported second-quarter revenue of $577.9 million--a 1 percent gain from the first quarter and about $7 million less than Wall Street expected.
Landes details in today's report that the key finding signaling a challenge to Amazon's growth is that consumers view the online retailer as an outlet for media products--books, CDs and videos--rather than as a store carrying an array of items such as kitchenware, garden furniture and hardware tools.
"This implies that the company is less of an e-tailing 'platform' for a wide array of products than the market may assume," Landes wrote.
The report also cites the recent departure of Amazon's former president and chief operating officer, Joseph Galli, for its near-term cautious outlook on the company.
"While (Amazon CEO) Jeff Bezos is without a doubt one of the great visionaries in retailing history, we think that the more operation firepower the company has, the better," Landes wrote.
A decelerating top-line growth is also a concern.
The research company is forecasting revenue growth of 47 percent in the fourth quarter of 2000, a sharp decline from the 167 percent increase the company saw in the same quarter a year ago.
"We therefore do not expect the upcoming Christmas to be a positive catalyst for the stock."